Automakers mull aid to art museum in Detroit bankruptcy

May 13, 2014|Reuters

(Joe Skipper Reuters, )

DETROIT (Reuters) - Detroit's three automakers are mulling a request by the city's art museum to help it raise money for a key component of Detroit's plan to restructure its debt and exit bankruptcy, representatives of the companies said on Tuesday.

Under an $816 million so-called grand bargain, the Detroit Institute of Arts (DIA) would contribute $100 million to ease pension cuts on the city's retirees and avoid a sale of art works to pay city creditors. The rest of the money would come from philanthropic foundations and the state of Michigan, where a $350 million contribution over 20 years or a $195 million lump sum payment needs legislative approval.

"Chrysler Group is committed to playing a positive role in Detroit's revitalization. Accordingly, we are reviewing the DIA's request," said Chrysler spokesman Kevin Frazier in an email.

Ford Motor Co spokesman Todd Nissen said in an email that the automaker has been a long-time supporter of the museum.

"We are having confidential discussions with the DIA and are considering the matter very carefully," he said.

General Motors Co spokesman Jim Cain said in an email that the DIA was important for a revitalized Detroit.

"Both GM and the GM Foundation are giving very careful consideration to how we can help preserve this treasure at such a critical time," he said.

A DIA spokeswoman declined to comment.

Detroit's creditors, including city workers and retirees, will start receiving information this week on voting on the plan to restructure $18 billion of city debt and other obligations. That plan seeks to minimize pension cuts by tapping in to the $816 million.

Starting on July 24, U.S. Bankruptcy Judge Steven Rhodes will conduct a confirmation hearing on the plan to determine if it is fair and feasible. On Monday, several creditors including the U.S. government, bond holders, nearby counties and bond insurance companies filed objections to the plan.